G7 Presidency

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 10th March 2005.

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Photo of Paddy Tipping Paddy Tipping Labour, Sherwood 11:30 am, 10th March 2005

What economic priorities he has set to be achieved during the presidency of the G7.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

Our aims are: that all countries agree to play their part in maintaining global growth and stability; that structural economic reform is taken forward to increase growth; and that, with the reform of the international institutions, we ensure that the world's poorest can share in rising prosperity. Tomorrow, the Commission for Africa will publish its report and the G7 and G8 in Gleneagles will consider it.

Photo of Paddy Tipping Paddy Tipping Labour, Sherwood

Will the Chancellor continue to give Africa a high priority? Ten million people there are co-infected with HIV and TB. Tuberculosis is growing at 4 per cent. and, in parts of the region, only one in three people complete a TB drug programme. Would not investment make a significant difference?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

My hon. Friend is right and I praise him for his work. Tuberculosis, HIV/AIDS and malaria are the diseases that are responsible for millions of people dying unnecessarily every year. The purpose of creating the global health fund was to ensure the capacity to treat them and the availability of immunisation and vaccinations. That is why it is especially appropriate today, when the scientists' report on malaria is published, that the British Government say that we are prepared not only to contribute towards vaccination for tuberculosis but to join other countries in purchasing and therefore financing an advance purchase mechanism for the new drug that may be a preventive vaccine for malaria. When similar work is done on HIV/AIDS, it will be necessary for the Governments of the richest countries to come together to support vaccination and the preventive work on that, too. That is the best contribution that we can make: not only helping in the short term with bed nets for malaria and vaccination for tuberculosis, but saying that, when those drugs are discovered, we will be behind the first advance purchase scheme in the world whereby the rich countries help the poor.

Photo of Oliver Letwin Oliver Letwin Shadow Chancellor of the Exchequer

One of the priorities for the G7 is obviously a sustainable tax policy. Has the Chancellor had time, during his pre-election overseas sabbaticals, to consider how to respond to the fact that the tax burden in other G7 countries has fallen by 2.5 per cent. of GDP since 1997? What has happened to our tax burden in the same period?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I hope that the right hon. Gentleman agrees that tax policy is a matter for national Governments, not international institutions. On the tax take in Britain, I am greatly influenced by his comments on taxation. He said:

"The sad truth is that when we were in office we made promises on tax we couldn't keep".

Our policy on taxation has been: to reduce the basic rate of income tax; to introduce a 10p starting rate of income tax; to cut capital gains tax from 40p to 10p for long-term investment, and to cut corporation tax from 33p to 30p and small business tax from 23p to 19p. That is the record on which we are proud to stand. We are also proud that we have financed the health service by our decision to raise national insurance. I notice that abolishing that is not part of the Conservatives' manifesto now—they lost the argument on the health service.

Photo of Oliver Letwin Oliver Letwin Shadow Chancellor of the Exchequer

Unfortunately, the Chancellor does not seem to want to answer the question. It is perfectly clear why not: while the tax burden in other G7 countries has been falling, Britain's tax burden has been rising. As my hon. Friend Sir Peter Tapsell pointed out a moment or two ago, the other G7 Governments will this week be reading the latest International Monetary Fund report, which shows clearly that the Chancellor, on his spending plans, would have to raise taxes further in the next cycle. As he is so reluctant to tell the people of this country, will he tell the IMF and the other G7 Governments which taxes he proposes to raise?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I have just explained to the right hon. Gentleman, who does not seem to be able to listen, that we have cut the basic rate of income tax, we have cut income tax through the 10p rate, we have cut capital gains tax, we have cut corporate tax and we have cut small business tax. When he stood in the 1997 election, he had to report that the Conservative party had raised taxes in many different areas. We will not take any lectures from the Conservative party on taxation. The leader of the Conservative party said to his conference on 5 October:

"In 1992 we promised to cut taxes year on year. But we put them up."

Photo of John McFall John McFall Chair, Treasury Committee

The Chancellor is aware that the Treasury Committee visited China last week in the wake of his successful visit. During his visit, did he detect a positive attitude by the Chinese authorities to engage with the G7, the IMF and the World Bank? During our presidency of the G7, has the Chancellor made any progress in ensuring the reform of those international forums, to take account of the current hugely significant impact of China on the global economy?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

As my right hon. Friend knows, as he is well versed in these matters, China has been present at the last two meetings of the G7 Finance Ministers for a discussion on its economy and the world economy. China, India, South Africa and Brazil will be invited to a special meeting of the G8 summit at Gleneagles with the other G8 leaders. The level of engagement with China is therefore increasing every year. What I found in China was a willingness on the part of China to co-operate with the United Kingdom, a huge market for exports of British goods in the future, and a huge interest in working with this British Government to solve some of the global problems, including international debt and poverty in the poorest countries.

Photo of Ms Julia Drown Ms Julia Drown Labour, South Swindon

Will one of the economic priorities include trade justice? Does the Chancellor think that he can use his position to consider agricultural subsidies, both from America and the common agricultural policy, so that we can get serious reform? At the moment, subsidised exports are being dumped on the poorest people in the world, and they cannot afford that to continue.

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

I understand the work that my hon. Friend has done in promoting both trade justice and debt relief over the past few years. We are all grateful for the work, which has brought significant results, with non-governmental organisations and others. Over the next few months, the pressure will grow on America and the European Union to enable an agreement on world trade to be possible in Hong Kong in December. Our proposal to end export subsidies is essential. It will also be necessary for us to offer to help countries in Africa, in particular, to have the capacity to enable them to trade. They will need investment in infrastructure, transport and communications so that they can trade fairly with the rest of the world. Part of the settlement at Hong Kong depends on our ability to provide additional overseas development aid to enable infrastructure to be built in those countries.

Photo of David Laws David Laws Shadow Chief Secretary to the Treasury

Will the Chancellor make it one of his G7 priorities to get international agreement on rules on Government borrowing? Does he still stand by the statement that he made in a speech in 1995, before he was elected to Government, that there should be tough, independent, external scrutiny of whether the Government are meeting their fiscal rules?

Photo of Gordon Brown Gordon Brown The Chancellor of the Exchequer

The hon. Gentleman knows that every organisation in the world comments on fiscal figures in every country. There is not a lack of external scrutiny of our figures. Scrutiny of the Liberal Democrats' figures might be improved, however, because none of the sums add up.